McGraw-Hill/Irwin
Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.
Chapter 9
Six-Sigma Quality
9-3
OBJECTIVES
•
•
•
•
•
•
Total Quality Management Defined
Quality Specifications and Costs
Six Sigma Quality and Tools
External Benchmarking
ISO 9000
Service Quality Measurement
9-4
Total Quality Management (TQM)
• Total quality management is
defined as managing the
entire organization so that it
excels on all dimensions of
products and services that
are important to the
customer
9-5
Quality Specifications
• Design quality: Inherent value of
the product in the marketplace
– Dimensions include: Performance,
Features, Reliability/Durability,
Serviceability, Aesthetics, and
Perceived Quality.
• Conformance quality: Degree to
which the product or service
design specifications are met
9-6
Costs of Quality
Appraisal Costs
External Failure
Costs
Costs of
Quality
Internal Failure
Costs
Prevention Costs
9-7
Six Sigma Quality
• A philosophy and set of methods
companies use to eliminate
defects in their products and
processes
• Seeks to reduce variation in the
processes that lead to product
defects
9-8
Six Sigma Quality (Continued)
• Six Sigma allows managers to readily
describe process performance using a
common metric: Defects Per Million
Opportunities (DPMO)
DPMO 
Numberof defects
 Numberof 
 opportunit
ies  x No.of units
 for error per 
 unit



x 1,000,000
9-9
Six Sigma Quality (Continued)
Example of Defects Per Million
Opportunities (DPMO) calculation.
Suppose we observe 200 letters
delivered incorrectly to the wrong
addresses in a small city during a
single day when a total of 200,000
letters were delivered. What is the
DPMO in this situation?
DPMO 
200
1 
So, for every one
million letters
delivered this
city’s postal
managers can
expect to have
1,000 letters
incorrectly sent
to the wrong
address.
x 1,000,000 1, 000
x 200,000
Cost of Quality: What might that DPMO mean in terms
of over-time employment to correct the errors?
9-10
Six Sigma Quality: DMAIC Cycle
• Define, Measure, Analyze,
Improve, and Control (DMAIC)
• Developed by General Electric
as a means of focusing effort on
quality using a methodological
approach
• Overall focus of the
methodology is to understand
and achieve what the customer
wants
• A 6-sigma program seeks to
reduce the variation in the
processes that lead to these
defects
• DMAIC consists of five steps….
9-11
Six Sigma Quality: DMAIC Cycle (Continued)
1. Define (D)
Customers and their priorities
2. Measure (M)
Process and its performance
3. Analyze (A)
Causes of defects
4. Improve (I)
Remove causes of defects
5. Control (C)
Maintain quality
9-12
Example to illustrate the process…
• We are the maker of this cereal.
Consumer reports has just published
an article that shows that we
frequently have less than 16 ounces
of cereal in a box.
• What should we do?
9-13
Step 1 - Define
• What is the critical-to-quality
characteristic?
• The CTQ (critical-to-quality)
characteristic in this case is the
weight of the cereal in the box.
9-14
2 - Measure
• How would we measure to
evaluate the extent of the
problem?
• What are acceptable limits on
this measure?
9-15
2 – Measure (continued)
• Let’s assume that the
government says that we must
be within ± 5 percent of the
weight advertised on the box.
• Upper Tolerance Limit = 16 +
.05(16) = 16.8 ounces
• Lower Tolerance Limit = 16 –
.05(16) = 15.2 ounces
9-16
2 – Measure (continued)
• We go out and buy 1,000
boxes of cereal and find that
they weight an average of
15.875 ounces with a standard
deviation of .529 ounces.
• What percentage of boxes are
outside the tolerance limits?
9-17
Lower Tolerance
= 15.2
Process
Mean = 15.875
Std. Dev. = .529
Upper Tolerance
= 16.8
What percentage of boxes are defective (i.e. less than 15.2 oz)?
Z = (x – Mean)/Std. Dev. = (15.2 – 15.875)/.529 = -1.276
NORMSDIST(Z) = NORMSDIST(-1.276) = .100978
Approximately, 10 percent of the boxes have less than 15.2
Ounces of cereal in them!
9-18
Step 3 - Analyze - How can we improve the
capability of our cereal box filling process?
–Decrease Variation
–Center Process
–Increase Specifications
9-19
Step 4 – Improve – How good is good
enough? Motorola’s “Six Sigma”
– 6s minimum from process
center to nearest spec
12s
6s
3
2
1
0
1
2
3
9-20
Motorola’s “Six Sigma”
• Implies 2 ppB “bad” with no
process shift.
• With 1.5s shift in either direction
from center (process will move),
implies 3.4 ppm “bad”.
12s
3
2
1
0
1
2
3
9-21
Step 5 – Control
• Statistical Process Control
(SPC)
– Use data from the actual
process
– Estimate distributions
– Look at capability - is good
quality possible
– Statistically monitor the
process over time
9-22
Analytical Tools for Six Sigma and Continuous Improvement:
Flow Chart
Material
Received
from
Supplier
No,
Continue…
Inspect
Material for
Defects
Defects
found?
Yes
Can be used to
find quality
problems
Return to
Supplier
for Credit
9-23
Diameter
Analytical Tools for Six Sigma and Continuous Improvement: Run Chart
Can be used to identify
when equipment or
processes are not
behaving according to
specifications
0.58
0.56
0.54
0.52
0.5
0.48
0.46
0.44
1
2
3
4
5
6
7
8
Time (Hours)
9
10 11 12
9-24
Analytical Tools for Six Sigma and Continuous Improvement: Pareto
Analysis
80%
Frequency
Can be used
to find when
80% of the
problems
may be
attributed to
20% of the
causes
Design
Assy.
Instruct.
Purch.
Training
9-25
Analytical Tools for Six Sigma and Continuous
Improvement: Checksheet
Monday
Billing Errors
Wrong Account
Wrong Amount
A/R Errors
Wrong Account
Wrong Amount
Can be used to keep track of
defects or used to make sure
people collect data in a
correct manner
9-26
Number of Lots
Analytical Tools for Six Sigma and Continuous
Improvement: Histogram
Can be used to identify the frequency of quality
defect occurrence and display quality
performance
0
1
2
Data Ranges
3
4 Defects
in lot
9-27
Analytical Tools for Six Sigma and Continuous Improvement:
Cause & Effect Diagram
Possible causes:
Machine
Man
The results
or effect
Effect
Environment
Method
Material
Can be used to systematically track backwards to
find a possible cause of a quality problem (or
effect)
9-28
Analytical Tools for Six Sigma and Continuous Improvement: Control
Charts
Can be used to monitor ongoing production process
quality and quality conformance to stated standards of
quality
1020
UCL
1010
1000
990
LCL
980
970
0
1
2
3
4
5
6
7
8
9
10 11 12 13 14 15
9-29
Other Six Sigma Tools
• Failure Mode and Effect Analysis
(DMEA) is a structured approach to
identify, estimate, prioritize, and
evaluate risk of possible failures at
each stage in the process
• Design of Experiments (DOE) a
statistical test to determine causeand-effect relationships between
process variables and output
9-30
Six Sigma Roles and Responsibilities
1. Executive leaders must
champion the process of
improvement
2. Corporation-wide training
in Six Sigma concepts and
tools
3. Setting stretch objectives
for improvement
4. Continuous reinforcement
and rewards
9-31
The Shingo System: Fail-Safe Design
• Shingo’s argument:
–
–
–
SQC methods do not prevent defects
Defects arise when people make
errors
Defects can be prevented by
providing workers with feedback on
errors
• Poka-Yoke includes:
– Checklists
– Special tooling that prevents
workers from making errors
9-32
ISO 9000 and ISO 14000
• Series of standards agreed upon by
the International Organization for
Standardization (ISO)
• Adopted in 1987
• More than 160 countries
• A prerequisite for global competition?
• ISO 9000 an international reference for
quality, ISO 14000 is primarily
concerned with environmental
management
9-33
Three Forms of ISO Certification
1. First party: A firm audits itself
against ISO 9000 standards
2. Second party: A customer audits
its supplier
3. Third party: A "qualified" national
or international standards or
certifying agency serves as
auditor
9-34
External Benchmarking Steps
1. Identify those processes
needing improvement
2. Identify a firm that is the world
leader in performing the
process
3. Contact the managers of that
company and make a personal
visit to interview managers and
workers
4. Analyze data
9-35
Question Bowl
Approximately what
percentage of every sales
dollar is allocated to the
“cost of quality”?
a. Less than 5%
b. About 10%
c. Between 15 and 20 %
d. More than 30%
e. None of the above
Answer: c. Between 15 and 20 % (for cost of
reworking, scrapping, repeated service, etc.)
9-36
Question Bowl
a.
b.
c.
d.
e.
Which of the following are
classifications of the “cost
of quality”?
Appraisal costs
Prevention costs
Internal failure costs
External failure costs
All of the above
Answer: e. All of the above
9-37
Question Bowl
a.
b.
c.
d.
e.
Which of the following are
functions of a quality control
department?
Testing product designs for
reliability
Gathering product performance
data
Planning and budgeting the QC
program
All of the above
None of the above
Answer: d. All of the above
9-38
Question Bowl
a.
b.
c.
d.
e.
Which of the following is a Critical
Customer Requirement (CCR) in
the context of a Six Sigma
program?
DMAIC
Answer: e. None of the
DPMO
above (The CCR is the
PCDA
criteria that is used to
DOE
define desired quality.
None of the above
Processing a loan in 10
days is an example of a
CCR.)
9-39
Question Bowl
The DMAIC cycle of Six
Sigma is similar to which of
the following quality
management topics?
a. Continuous improvement
b. Servqual
c. ISO 9000
d. External benchmarking
e. None of the above
Answer: a. Continuous improvement
9-40
Question Bowl
The “A” in DMAIC stands for
which of the following?
a. Always
b. Accessibility
c. Analyze
d. Act
e. None of the above
Answer: d. Analyze (Define, Measure,
Analyze, Improve and Control)
9-41
Question Bowl
Which of the following
analytical tools depict
trends in quality data over
time?
a. Flowcharts
b. Run charts
c. Pareto charts
d. Checksheets
e. Cause and effect diagrams
Answer: b. Run charts
9-42
End of Chapter 9